Chevron, Merck Disclose Funding to 2010 Attack-Ad Groups

A pumpjack above a Chevron Corp. oil well in the Midway-Sunset oil field near Taft, California. Photographer: Chip Chipman/Bloomberg

March 29 (Bloomberg) -- Some secret donors who gave money
to groups that paid for millions of dollars in attack ads during
the 2010 midterm elections are becoming public.

Chevron Corp., an oil and gas company; Merck & Co., a drug
maker; and the American Petroleum Institute are among the
entities that have disclosed through corporate filings or
Internal Revenue Service reports their donations to politically
active groups that are growing in influence.

The non-party organizations that don’t disclose their
donors increased their spending to $133 million in 2010,
compared with $875,000 during the previous off-year elections in
2006, according to the Center for Responsive Politics, and
favored Republicans by a ratio of 10-to-1.

“If the disclosure comes so much later, after the ads have
been paid for and the candidates have been elected, not knowing
who was influencing that spending leaves voters in the dark,”
said Bill Allison, editorial director of the Sunlight
Foundation, a Washington-based watchdog group that follows
campaign money. “You don’t know what the agendas of the groups
are and you don’t know the money behind these ads.”

Representatives of all three entities said they gave money
to pay for advocacy of their industry in Washington, not for
political purposes.

“Our goal is simple,” said Eric Wohlschlegel, a spokesman
for the Washington-based petroleum institute. “We give to
groups to engage them and their members in the energy debate,
and the importance of developing vast oil and natural gas
resources.”

Political Activity

Still, none said they would stop giving or impose
restrictions on their future contributions. Some lawmakers say
the groups these corporations and trade associations supported
exist only to engage in political activity.

“It’s clear these organizations are spending a lot of
money on political campaigns, not social welfare activities,”
said Representative Peter Welch, a Vermont Democrat.

Such distinctions can be lost when money moves between
organizations and ends in one that pledges to keep its
contributors’ names secret.

Take the case of Merck, the second-largest U.S. drug maker.
It gave $7 million in 2010 to the Pharmaceutical Research and
Manufacturers of America, the drug industry’s trade association,
according to a disclosure on the company’s website. PhRMA
donated $4.5 million the same year to the American Action
Network, a Washington-based group that doesn’t disclose its
donors. The PhRMA donation was the largest contribution the drug
makers’ group made in at least three years, according to IRS
records.

Follow the Money

American Action Network, whose chairman is former
Republican Senator Norm Coleman of Minnesota, spent more than
$19 million on ads in the midterm elections to help elect
Republicans, Federal Election Commission records show.

One advertisement targeting Democratic Representative Dina
Titus of Nevada accused her of supporting funding Viagra for
rapists in the health-care legislation that was signed into law
by President Barack Obama and is now before the U.S. Supreme
Court. Titus, a House member, never voted on the issue; rather,
the Senate had considered an amendment seeking to restrict
spending on the erectile dysfunction drug. “What is going in
Washington?” the ad said. Titus lost her re-election bid.

Democratic Donations

In addition to its check to the American Action Network,
PhRMA also gave $3.4 million to a Democratic-leaning outside
group, Citizens for Strength and Security, according to
disclosures made to the IRS.

“We give support to a wide variety of organizations, all
of whom share our mission of increasing access to innovative
medicines that help improve the lives of Americans,” said Matt
Bennett, a PhRMA spokesman.

Some companies took steps to ensure that their
contributions weren’t used for political activity.

Prudential Financial Inc. contributed $2.1 million to U.S.
Chamber of Commerce and an affiliate that advocates for
restrictions on lawsuits, according to a disclosure on the
company’s website. The chamber spent $30 million in 2010 -- more
than any other outside group -- and most of it was aimed at
helping to elect Republicans, FEC records show.

“The money that we give them was largely an endowment to
help them with operating expenses,” said Bob DeFillippo, a
spokesman for Newark, New Jersey-based Prudential, the second-biggest U.S. life insurer.

Target Corp., which gave to the chamber, said on its
website that it instructs groups it supports not to use their
money “to influence the outcome of specific elections.”

U.S. Chamber Contributors

Chevron contributed $500,000 to the chamber. A spokesman
for San Ramon, California-based Chevron, Brent Tippen, said the
company donates “to various trade associations like API to
provide representation for our industry and to the U.S. Chamber
of Commerce to provide representation on general business
issues.”

Merck also donated $725,000 to the chamber.

“Merck has long-standing relationships” with groups
“that align with our mission to help the world to be well
through our innovative medicines and vaccines,” said Kelley
Dougherty, a spokeswoman for the Whitehouse Station, New Jersey-based company. She said Merck doesn’t monitor how those groups
spend the money nor does it place conditions on its giving.

Prudential, Chevron, Merck and Minneapolis-based Target are
among companies voluntarily revealing their contributions to
trade associations and other nonprofit groups, according to the
Washington-based Center for Political Accountability.

Oil and Gas

Bryan Goettel, the chamber’s spokesman, declined to talk
about the company contributions and how they related to the
political ads aired during the 2010 campaign. “We don’t discuss
anything related to our members,” Goettel said.

The American Petroleum Institute, which advocates for the
oil and gas industry, gave $25,500 to Americans for Prosperity,
IRS disclosures show. Americans for Prosperity, based in
Arlington, Virginia, spent more than $1.2 million in 2010 to
help elect Republicans to Congress, according to FEC records.

The petroleum institute also gave $25,000 to the
Alexandria, Virginia-based 60 Plus Association, which favors
privatizing Social Security and spent more than $7 million in
2010 in support of Republicans, IRS and FEC records show.

Among the petroleum institute’s other beneficiaries in 2010
were the AFL-CIO and the Southern Christian Leadership
Conference, an organization that advocates for civil rights and
was once led by Martin Luther King Jr.

Wohlschlegel said the group didn’t give money to support
pro-Republican campaign efforts. “We have supported a number of
groups in a bipartisan way for some time,” Wohlschlegel said.

Spending This Year

Such spending is continuing this year.

When Obama proposed cutting federal spending on
prescription drugs last September, American Action Network
announced a $1.6 million ad campaign against the proposal. The
chamber already has spent $5.5 million on broadcast TV ads in
support of Senate Republicans running in 2012, according to New
York-based Kantar Media’s CMAG.

Americans for Prosperity, partially funded by energy
executives Charles and David Koch, spent $7 million on anti-Obama ads, according to CMAG, and 60 Plus announced this month
that it would spend $3.5 million on TV and online ads against
Obama’s health-care law.

Welch and Representative Ted Deutch, a Florida Democrat,
joined by 30 of their Democratic colleagues, asked the IRS
yesterday to investigate whether nonprofits are “improperly
engaged in political campaign activity.” Most of the groups are
incorporated under Section 501(c)(4) of the tax code, meaning
they can’t make political activity their primary focus.

Money for Ads

“What are you using this money for?” asked Deutch in an
interview following a press conference with Welch yesterday.
“If you’re not using the money to run ads, what are you using
the money for and where is the money to run ads coming from?”

The nonprofits’ spending in 2010 exploded after the U.S.
Supreme Court, in its Citizens United decision, removed
restrictions on corporate and union spending on campaigns.
Republicans won 63 House seats and a majority, and picked up six
seats in the Senate.

Democrats in the House and Senate have introduced
legislation to require nonprofit groups funding political ads to
reveal the sources of their larger donations. Senate Republicans
blocked similar legislation in 2010.

“This is going to be an issue as this year progresses,”
said Bill de Blasio, the New York City public advocate who
oversees pension investments and established a group of public
officials pushing for greater corporate disclosure. “More
Americans are going to be repulsed by the galloping flow of
money and are going to start holding companies responsible.”